The Law Commission has (thankfully and finally) recognised that laws implemented more than a century ago are preventing businesses from running efficiently in a digital world. The Law Commission is set to review UK laws relating to digital assets so as to allow technology to ‘flourish’.
What are digital assets?
Digital documents, Audible content, Motion picture, and any digital data stored on digital appliances (which is pretty broad!)
New digital assets, old law
Here are some examples of how laws are incompatible with digital assets: As digitised documents are intangible, they can’t currently be ‘possessed’ and classed as a document under the Bills of Exchange Act 1882. This, understandably, causes difficulties in the context of international trade finance.
Electronic documents and software are clearly not new in commercial terms, but assets such as Bitcoin and other cryptocurrency, and distributed ledger entries tied to physical assets, are less familiar to users and advisers, and the law is lagging behind.
Even the witnessing of documents that are executed as deeds has been a cause of uncertainty (see further here).
The Law Commission will first consider the issue of possession with regard to a) documents of title, b) documentary intangibles and c) negotiable instruments, and they intend to publish a consultation paper in the first half of 2021.
Law Commissioner, Professor Sarah Green said:
“We believe there is a compelling case for reviewing the law in these areas to ensure that the jurisdiction of England and Wales remains a competitive choice for those who want to use and to develop emerging technology.”
This is welcome news and not a moment too soon, especially with C-19 and so much remote working - watch this space!
By James Gill and Anna Whaley
“Smart contracts, digitised assets and electronic documents promise to revolutionise the way we do business, digitising existing processes and in some cases introducing entirely new concepts. There are, however, lingering uncertainties about whether and how English law can accommodate these.